The stages owners go through on learning about defects
This article provides an overview of a presentation by Lookup Strata and Christopher Kerin, based on a theory initially proposed by Michael Teys.
Introduction
Building defects are a significant problem right across Australia. In 2010 there was a report done that estimated 85% of new buildings in NSW were subject to varying severity of building defects. We have had our fair share here in WA too.
Owners experience a variety of emotions when they learn that there are defects in their new build property. It is unexpected and can put a severe financial burden on owners, if the timeframes for submitting a formal complaint are missed, or if the builder is no longer in business to rectify issues.
In the presentation (see link below) Christopher Kerin likened the stages that the owners go through to “the 5 stages of death and dying”. (first observed by a psychologist who studied people diagnosed with a terminal illness).
| Stage | Feeling | Characterised by... |
|---|---|---|
1 |
Denial |
Owners can’t get their heads around the reality that a new building does not function the way it should. I.e. keep out water etc. Can’t be true? |
2 |
Anger |
Firstly at the Strata Manager, then the builder/developer, then the governing bodies who are meant to certify the professionals who constructed the building. Then local members of parliament etc. They go up the chain of responsibility. Some people get stuck on this stage for a really long time, mainly because of the $$ that rectification will cost. |
3 |
Bargaining |
They delay dealing with the issue, they maybe tell themselves it’s not that bad? Is it? |
4 |
Depression |
“The Strata Manager was useless, the builder came back to the site with a silicone gun but there was no monetary investment from the builder to fix the issue properly. The Shire and the local member were useless” They feel lost and hopeless. No one will help them. |
5 |
Acceptance |
"Okay, so it’s my apartment, it’s my problem, I need to take responsibility. It’s not what I wanted to do, it's going to take time, effort, and money". Owners prepare themselves and appoint a "clipboard commando" |
Causes of defects:
- Poor workmanship
- Negligent Design – e.g. wrong materials for location
- Combo of both
Whilst poor workmanship is a builders issue, poor design is an issue that can become messy and blame is shifted back and forth.
E.g. if a building is next to the ocean, it would require the installation of parts for automatic gates which are specially coated to resist the effects of salty air. If this isn’t specified on the architecture plans and regular parts are used in the build, they will fail much quicker than if those parts were not subjected to coastal conditions. Blame is shifted back and forth as each party claims not to be at fault. The owners get stuck paying for expensive repairs and ongoing maintenance.
The best and worst-case scenario
Best case
Owners get to the acceptance stage quickly and accept that the process of getting a resolution will be drawn out and will be ongoing for the next few years.
Buildings with the best outcomes have higher percentages of Owner Occupiers. They live there so they care more. Some of the owners are in the demographic of "male, recently retired, previously upper or middle management, wife wants husband to get a new hobby". These people have the time to become a "Clipboard Commando". They keep in contact with owners/Strata Managers/developers etc and organise meetings, provide updates and so on. They are the person to drive the project forward. Every building needs one of these people!
Worst Case
The worst-case scenario is when the majority of owners at 35 and under. They are mainly investors and the tenants, whilst they may notice damp patches etc, they chose just to move, so the population of the building is highly transient. The owners may not actually be aware of the issues and their care factor is significantly less. They are looking at numbers and don't want to spend money or time getting a resolution. Owners do not put their hands up to become the "clipboard commando". The building passes the statute of limitations, the builders are off the hook and problems eventually become worse. This leads to poor returns for investors and lower occupancy rates and eventually, large sums need to be raised as specialists have to be engaged to figure out the scope of work.
Statute of Limitations
From the date of practical completion, owners have 6 years to bring a case to the attention of DMIRS. https://forms.commerce.wa.gov.au/building-commission/complaint. Strata Companies with defect "red flags" should consider having a defect report prepared. This should be done when the building is approximately 4 years old so that owners may use the report as leverage to get defects rectified ASAP, or falling that, as evidence in a complaint whilst they still have time remaining, before the building is 6 years old.
Some builders are notorious for “kicking the can down the road” until the statute of limitations has expired. Complaints must be submitted and not withdrawn until satisfied. The builder may say the right thing and send a subby with a silicone gun. The purpose is the drag the owners across the statute of limitations when they may walk away. (especially some smaller ones, who don’t care about their reputation).
The COO can be held liable for neglecting to take action (pursue the builder through SAT, DMIRS etc) within the appropriate timeframes. One insurer has reported nine claims from owners who claim the COO failed to act within the building defect period. This has left them financially out of pocket as the funds to rectify are now being sought from owners.
What is a defect? definition
When defining the Scope of the inspection, strata companies should also form an understanding with the inspector as to what is a defect? The Australian Glossary of Building Terms defines a building defect as a “fault or deviation from the intended condition of a material, assembly or component”. A defect can be a result of defective design, faulty workmanship, substandard materials, or non-compliance with the structural performance requirements of the National Construction Code or building permit conditions.